Naira Strengthens to N1,560.57 Against Dollar Amid Forex Reforms

The Naira has witnessed a strengthening trend on the official market, reaching N1,560.57 to the dollar, propelled by recent foreign exchange (FX) reforms. This represents a 0.79 percent appreciation compared to the previous day’s rate of N1,572.86, as revealed by the summary of FX trading on Tuesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM).

LEADERSHIP reports that the Central Bank of Nigeria (CBN), in January, announced the completion of payments to verified claims by foreign airlines, totaling an additional $64.44 million. This brought the total verified amount paid to the air transport sector to $136.73 million, according to the CBN, who declared that all verified airline claims had been cleared.

Despite these assertions, foreign airlines have contested the CBN’s claims of legitimate FX clearance, asserting that over $700 million of their ticket revenue remains trapped in Nigeria. Kingsley Nwokoma, President of the Association of Foreign Airlines and Representatives in Nigeria (AFARN), emphasized the need for transparency, urging the CBN to provide evidence of payment to substantiate its claims.

The Naira’s recent appreciation marks a significant gain of 4.28 percent against the dollar compared to its lowest value of N1,627.40 per dollar recorded on March 8, 2024, at NAFEM, according to data compiled from the FMDQ Securities exchange. Intraday trading on Tuesday saw the Naira closing at N1,626.50 per dollar at its high, and N1,415 per dollar at its low.

Furthermore, the CBN recently announced policy measures aimed at stabilizing the forex market, including the unification of the foreign exchange market, promotion of a willing buyer willing seller market, removal of limits on margins for International Money Transfer Operator (IMTO) remittances, and broad reforms in the Bureau De Change (BDC) segment to enhance transparency and boost supply.

The pressure on the Naira/dollar exchange rate appears to be easing, coinciding with sustained growth in Nigeria’s external reserves and a remarkable increase in Diaspora remittances. The recent Monetary Policy Committee (MPC) meeting saw adjustments to key monetary policy parameters, including a 400 basis point increase in the Monetary Policy Rate (MPR) to 22.75 percent, aimed at curbing inflation and stabilizing the exchange rate.

Analysts anticipate further stabilization of the Naira in the coming weeks, underpinned by ongoing policy reforms and increased liquidity in the forex market. As Nigeria navigates its economic landscape, maintaining stability in the forex market remains a priority for sustaining growth and fostering investor confidence.

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